Quantity of aggregate supply

Definition

The quantity of aggregate supply refers to the total amount of goods and services that all firms in an economy are willing and able to produce at a given price level during a specific time period.

Analogy

Imagine a buffet restaurant with a limited number of dishes available. The quantity of aggregate supply is like the number of dishes the restaurant can offer on its menu. It depends on factors such as the availability of ingredients, kitchen capacity, and chef's skills.

Related terms

Aggregate supply curve: A graphical representation showing the relationship between the price level and the quantity of aggregate supply in an economy.

Long-run aggregate supply (LRAS): The level of aggregate supply when all input prices, including wages, have fully adjusted to changes in the price level.

Short-run aggregate supply (SRAS): The level of aggregate supply that can change due to temporary factors such as changes in resource prices or business expectations.